My initial reaction to this book was negative since it focused so much on the petty. But then, upon reflection, I decided that it was undoubtedly an accurate, if limited, account of how people function, and don’t function, inside government agencies. And for this reason was worth reading.

When Champ began his first job at the SEC, heading up investment management exams in New York, he assumed that the SEC was “a typically dysfunctional bureaucracy that needed to fix what had been broken.” Instead, he found that “there were parts of it that had never been built.” For instance, there were no internal guidelines on how to do the examinations of financial firms; “employees were more or less left to use their best judgment.” And some of the procedures “were slanted toward what was best for government workers—not enforcement of the federal securities laws. Examiners at Madoff’s firm actually drafted a letter asking the options exchange for records of his trading, but the examiners appear to have decided not to send the letter because it would pull in too many records that would have taken a long time to review. If those examiners had had procedures requiring them to verify at least some trading, they would have sent the letter and Madoff might have been unmasked because he did not trade at all—on the exchange or anywhere else.” And lest you think these investigators were swamped with work, on average they completed only a little more than two exams per person per year.

Civil service protections and union grievance procedures make it nearly impossible to fire SEC employees. The one case Champ cites in which an employee was actually let go involved a supervisor who had not shown up at the office in about five years (and who nonetheless got his standard annual raise). A new manager succeeded in having him terminated.

Another commonplace in the SEC and throughout the federal government is the anonymous complaint. Since employees have such strong job security, they can send the inspector general and others anonymous grievances without fear of consequences. “Those opposed to change use anonymous notes to protect the status quo.” During Champ’s tenure at the SEC, these nameless complaints appeared constantly. It cost him thousands of dollars in legal fees to help navigate the investigations.

Champ initiated reforms where he could, first in examinations and then as the top federal policymaker for investment management, also known as the wax museum when he arrived because it was frozen in time and place. IM has three major responsibilities: “it writes the rules regulating the investment management industry, provides guidance to industry and government on how those rules are applied in practice, and reviews documents that mutual funds use to sell their shares to investors.”

Champ’s account of the state of affairs in the wax museum is chilling. He introduced changes, including upgrading antiquated technology and hiring a math geek squad. But, even though he praises the efforts of many of his colleagues who “work so hard for investors,” one has the feeling that the SEC remains a work in (very slow) progress. Of course, as financial regulations get rolled back, it may have more time to improve its own infrastructure.